In the world of cryptocurrency, where volatility is the norm, upcoming decisions of the Bank of Japan (BOJ) raise considerable concerns among investors. A BOJ meeting will be held on 18-19 December 2025, where interest rates are expected to rise to 0.75% – the highest since 1995. Experts and analysts, including those from the X platform (formerly Twitter), warn that this may cause significant declines in the bitcoin market (BTC). Based on the historical data and mechanisms of the global financial system, let's look at why this decision can introduce greater volatility in the cryptocurrency market.
Historical Reactions of Bitcoin to BOJ Increases
Analysts, such as those at the Coin Bureau, emphasize that previous interest rate increases in Japan have always associated with sharp fall in bitcoin prices. Here are the key examples:
- March 2024 (+10 basis points, from -0.1% to 0%): Bitcoin dropped by 23%.
- July 2024 (+15 basis points, from 0.1% to 0.25%): A drop of 26.6%.
- January 2025 (+25 basis points, from 0.25% to 0.5%): Biggest crash – minus 31.89%.
These data are derived from the analysis of bitcoin graphs relative to the US dollar (BTC/USD), where there are clear correlations between BOJ decisions and price movements. For example, in January 2025, after an increase, bitcoin lost over $200 billion of market capitalization in a few days. Why is this happening?
Japan is the largest foreign debt holder in the United States. As BOJ raises its feet, capital returns to Japan, which reduces dollar liquidity in global markets. Investors who borrowed cheap yen must pay off loans, leading to a sale of risk assets such as Crypto. As @coinbureau noted on X: "When the feet in Japan grow, money comes home, liquidity in dollars dries up and assets like BTC are sold".
Similar warnings come from @Coinvo, who quotes economic experts: "Experts believe that the upcoming foot raise in Japan will bring Bitcoin to $63,000". This is a level that could mean a further correction of current quotations (about $85,000 at 15 December 2025).
Carry Trade and Flash Crash Risk
Polish analyst @CryptoStasiak in his post on X explains in detail the mechanism that can lead to chaos. Japan maintained low or negative interest rates for decades, making it the ideal source of cheap capital. The carrying trade scheme is simple: borrow yen at low interest rates, exchange for dollars and invest in higher rate assets such as US shares, bonds or Crypto.
However, the era of cheap yen is coming to an end. Bloomberg conducted a survey among 50 economists – everyone expects a raise. As @CryptoStasiak writes: "The entire global financial system will have to reprogram". It reminds of "Black Monday" on August 5, 2024, when the unexpected increase of BOJ caused flash crash: bitcoin fell by 16% in one night and traditional markets flooded blood.
The key question is, will it be different this time? Unlike previous increases, this is expected for weeks. The market could already "value" the decision, which is seen after the current lack of enthusiasm in cryptocurrency – bitcoin behaves like a "shitcoin", and investor interest is minimal. Nevertheless, the risk remains high. As @CryptoStasiak emphasizes: "The chances that the decision is already priced are high, but we should not feel safe before Thursday".
What Next for Investors?
For investors, the coming days are a time of increased vigilance. If history repeats itself, we can see another drop of 20-30%, which would bring bitcoin below $70,000. On the other hand, if the market is prepared, the increase can go without major shocks and even become a catalyst for reflection.
